Financial stress climbs in Melbourne after second COVID wave; hospitality workers 86 per cent more stressed than national average with one in three applying for early super release 

• Hospitality and retail workers suffering the most financial stress
• High correlation with COVID impacted industries and early super release applicants
• Pandemic a catalyst for positive financial behaviour

New insights from AMP reveal the impact on financial stress caused by Victoria’s second stage-4 COVID lockdown, and a strong correlation between financial stress levels, the industries most impacted by the pandemic and those accessing early release super.

The ‘second-wave’ impact on Melbourne

AMP’s Financial Wellness research has found 61 per cent of workers in Melbourne reported feeling stressed about their finances during Victoria’s second COVID lockdown – an increase from 54 per cent prior to the lockdown. Of these Melbournians, 80 per cent indicated the stress was impacting their workplace productivity, with 49 per cent significantly reducing spending.

The levels of ‘severe anxiety’ in Melbourne also rose sharply during the lockdown, increasing from 4 per cent to 11 per cent of workers. At the same time, the number of Melbourne workers concerned about their ability to financially recover from COVID, rose to 34 per cent, from 26 per cent prior to the second lockdown.

Hospitality and retail workers most financially stressed

Hospitality and retail, two of the industries most impacted by COVID-19, have the highest rates of financially stressed workers – 86 and 64 per cent higher than the national rate respectively.

According to analysis of AMP’s clients, these industries have also seen high numbers of applicants for early access to super as part of the Government’s relief package. One in three members of AMP’s superannuation plans who work in the hospitality industry have applied for early release, the most of any industry.

A catalyst for good financial behaviours

The financial stress caused by COVID-19 has triggered positive financial behaviours in many Australians. At a national level, the research shows a six per cent increase in the number of workers establishing a financial plan and saving an additional 5 per cent for a rainy day. Those directly impacted by COVID are 10 per cent more likely to have taken action to save.

The second wave was a further catalyst for Melbourne workers to take positive financial action, with 35 per cent creating new financial goals, up from 27 per cent prior to the lockdown

The leading cause of stress in Australia

Independent research confirms that financial issues are the top cause of stress among Australians, more so than any other trigger, including family dynamics and personal health^[1]. More than a third of Australians find dealing with money, or even thinking about it, stressful and overwhelming^[2].

AMP General Manager, Workplace Super Engagement, Stephen Owen said:

“As we look ahead with optimism to a better 2021, AMP’s research shows the impact COVID has had on the financial wellbeing of Australian workers and the industries most impacted.

“Encouragingly, the research also shows that many Australians have used the stress caused by COVID as a motivator to take action to review their financial circumstances, put goals in place and make plans for the future.

“We know these actions can give people a greater sense of control, and significantly improve financial and general wellbeing.

“There are other relatively easy steps people can take to reduce stress, including taking advantage of the many freely available online education resources, and participating in the education programs their employer or superannuation provider may offer.

“Our industry also has an important role to play in helping those Australians who have withdrawn super consider how to rebuild their balances so they close any retirement savings shortfall and help improve their quality of life in later years.”

Figures based on reported levels of severe and moderate levels of financial stress, and national average of 14%, the equivalent of 1.8 million Australian workers. In total, 49% of Australian workers reported some level of stress about their finances.

High-level findings

AMP’s 2020 Financial Wellness research has found severe and moderate levels of financial stress are impacting 1.8 million Australian workers, with nearly half feeling financially stressed for an average of six and a half years or more. In total, 50 per cent of all Australian workers reported some level of stress about their finances.

The cost to Australia’s economy is $30.9 billion annually due to employee distraction and absenteeism – those severely and moderately financially stressed are ineffective at work for approximately 7.7 hours a week, and absent for a further 1.2 hours a week through sick days.

AMP’s Financial Wellness programs

AMP’s Financial Wellness programs offer real support to our clients’ employees as part of our superannuation relationship. Employees have free access to education and insights to equip them with the knowledge and skills needed to manage money more effectively. AMP’s aim is to empower employees to make smart financial choices.

Seven tips to improve financial wellness

1. Take action – utilise online resources and education programs provided by your employer to improve your understanding of key financial drivers, including superannuation, debt and cashflow management, insurance and investment principles.
2. Set goals and put a plan in place to achieve them – connecting finances with goals helps us engage with our finances, and then having a plan to achieve these goals can significantly ease stress.
3. Create a budget that works for you – writing up a budget may take an afternoon out of your diary, but it will help you to more easily identify where there’s room for improvement. Then use one of the many budgeting apps freely available to track progress.
4. Consider rolling your debts into one – rolling multiple debts into a single loan can reduce fees and interest. It also provides greater visibility and control over your finances.
5. Set aside some emergency cash – an emergency resource of funds could give you peace of mind and reduce the need to apply for high-interest borrowing options should you be faced with an unexpected expense or new circumstances.
6. See if you can get a better deal with your providers – you more than likely have several product and service providers, and savings can be made by switching providers, which over time can amount to considerable benefits.
7. Don’t be afraid to seek financial assistance – if you are struggling to make repayments, you may be able to seek assistance from your providers by claiming financial hardship. All providers must consider reasonable requests to change their terms in instances where you may be suffering genuine financial difficulties. In addition, you can talk to a financial counsellor (free of charge) at the National Debt Helpline by calling 1800 007 007.

To access the research and more information about how to improve financial wellbeing visit www.amp.com.au/financialwellness

About the research

AMP’s Financial Wellness research is conducted by The Behavioural Architects, a global insight, research and strategy consultancy, specialising in the application of behavioural science. Insights were collected from more than 2,100 Australian employees between June and July 2020 and weighted to reflect Australia’s broader workforce, based on data from the ABS.

^[1] Australian Psychological Society (2015): Stress & wellbeing: How Australians are coping with life

^[2] Australian Securities & Investments Commission (2018): Australian financial attitudes and behaviour tracker